‘State fails when there is no rev­enue’

KUALA LUMPUR: The men­tal­ity of busi­ness op­er­a­tors and in­di­vid­u­als must be changed to en­hance tax col­lec­tion.

Economists said un­paid taxes, es­pe­cially those from un­der­ground economies, were af­fect­ing the coun­try’s rev­enue.

Asli Cen­tre of Pub­lic Pol­icy Stud­ies chair­man Tan Sri Ra­mon Navarat­nam said the ex­tent of the un­der­ground econ­omy, run by il­le­gal busi­nesses was not known, but its ef­fects could be dire.

This came as a re­sponse to Prime Min­is­ter Datuk Seri Na­jib Razak who wanted the In­land Rev­enue Board (IRB) to tackle the flour­ish­ing un­der­ground econ­omy.

“There is a big prob­lem in cre­at­ing aware­ness, co­op­er­a­tion, un­der­stand­ing and good­will to pay taxes. Un­der­ground economies can lead to il­le­gal ac­tiv­i­ties, like drugs, smug­gling and rob­bery, which will af­fect the gov­ern­ment’s rev­enue.

“IRB should win the con­fi­dence of the peo­ple, in­stead of be­ing se­lec­tive or be­ing ‘too kind’, he told the New Straits Times.

Ra­mon said un­der­ground busi­nesses were thriv­ing as a re­sult of cor­rup­tion and lack of en­force­ment.

“There must be a culture of in­tegrity, ac­count­abil­ity and trans­parency.

“When I was in the civil ser­vice 30 years ago, cor­rup­tion was not a big is­sue.

“A lot de­pends on lead­er­ship and en­force­ment. If we don’t han­dle it well, it will be too late.

“A state fails when there is no rev­enue to run the coun­try.”

Univer­siti Utara Malaysia’s School of Eco­nom­ics, Fi­nance and Bank­ing se­nior lec­turer Dr Ir­wan Shah Zainal Abidin said, “An im­prove­ment in rev­enue col­lec­tion will al­low the coun­try to in­vest more in projects which ben­e­fit the peo­ple, such as de­vel­op­ing ef­fi­cient trans­porta­tion and a qual­ity ed­u­ca­tion sys­tem.”